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April 30, 2007
On 1st Quarter GDP, Hold That Thought
From SmartMoney.com, the basics of the March report on personal income and outlays:
The personal income of Americans rose strongly again in March but their spending didn't meet expectations, while a key gauge of core inflation grew at a slower rate.
Personal income increased at a seasonally adjusted rate of 0.7% a second straight month, the Commerce Department said Monday. Originally, February income was seen up 0.6%.
March personal consumption grew 0.3% compared to the month before. Spending increased a revised 0.7% in February. Originally, February spending was seen 0.6% higher...
Spending on durable goods, those designed to last three years or longer, was unchanged in March, after falling 0.4% the previous month. Non-durable goods spending rose 1.0%, after a 0.4% climb in February. Spending on services decreased 0.1%, following a 1.1% increase in February.
That figure on services consumption is a bit eyebrow-arching, but overall it's hard to get too excited about this report, coming as it does on the heels of last Friday's advance figures for 1st quarter GDP. In case you haven't heard, it was not great: Macro Man said Blah, Claus Vistesen said "ouch", and it hurt Dave at VoluntaryXchange to give the economy a "D" (to name just a few who were underwhelmed at the 1.3 percent annualized pace revealed by the Bureau of Economic Analysis). William Polley has a nice round-up of other blogger comments, but I am with him in thinking that King at SCSU Scholars called it about right:
When this number is revised (and there will be two such revisions) the trade figure is the one that changes the most. So I expect this GDP estimate to be rather volatile to trade revisions.
The record does indeed show that the trade figures are apt to change as the numbers are re-crunched:
I wouldn't argue that the 1st quarter is likely to look anything other than weak when all is said and done, but I wouldn't carve that 1.3% in stone just yet.
April 30, 2007 | Permalink
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April 29, 2007
What Are You Going To Believe -- Theory Or Your Own Lying Eyes?
The blogger epicenter of the free-trade debate is rumbling at Harvard, with Greg Mankiw and Dani Rodrik engaged in a terrific -- and important -- conversation about winners, losers, and how (or whether) economic theory divides the two. You can check-in on the state of the debate at Angry Bear, where pgl provides the appropriate links. It is highly recommended reading, but I think it ought to come with a few warning labels. For example, Professor Rodrik responds to Professor Mankiw with this claim:
... there is no theorem that guarantees that the partial-equilibrium losses to import-competing producers “are more than offset by gains to consumers from lower prices.”
In a related vein, pgl opens his post with:
Let's be perfectly clear: There are no theorems in economics that guarantee anything about the real world. Economic models are not descriptions of physical realities but formalizations of stories about how social interactions deliver particular outcomes. Different, equally coherent, stories deliver different predictions about the world. The claim that "free trade benefits everyone" is not a fallacy, but a particular outcome based on a particular model. Different models deliver different answers, so theory alone does nothing beyond eliminating stories that are internally inconsistent.
Or, perhaps, unconvincing. The missing ingredient in this most recent installment of the free-trade discussion is evidence in favor of one story or another, a task that is a good deal messier than writing down models. What makes matters worse is that adjudicating the issue is not a mere matter of counting up winners and losers. In the court of determining what is "good" or "bad", economists have standing to address one question, and one question only: Can someone be made better off without making anyone worse off? That too depends on the model at hand, and in fact it's even worse than that. The Rodrik-Mankiw debate revolves in part around a result known as the Stolper-Samuelson theorem. Greg Mankiw does a good job explaining Stolper-Samuleson and its relevance to the subject at hand, but I'll note one item from the Wikipedia description of the theorem:
If considering the change in real returns under increased international trade a robust finding of the theorem is that returns to the scarce factor will go down, ceteris paribus. A further robust corollary of the theorem is that a compensation to the scarce-factor exists which will overcome this effect and make increased trade Pareto optimal.
In simple terms, there are losers, but the winners can win enough to more than match those losses. All would be well with the world if the winners and losers could be easily identified, and an appropriate compensation scheme implemented. But what if that is not feasible? What is the right move then? To protect the losers at the expense of significant opportunity cost to potential winners? The other way around? I've yet to encounter an economist trained to answer those questions, and you should be very suspicious of any who speak as if they are.
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April 27, 2007
Wolfowitz's Defenders -- Bono Next?
Let me state at the outset that I have nothing to say about the brouhaha over Paul Wolfowitz's alleged improprieties at the helm of the World Bank -- or lack thereof -- or about his competence as manager of this, that, or any other thing. But I think this, from the opinion page of today's Wall Street Journal, is important:
At a press conference during this month's World Bank-IMF meetings in Washington, four of the more progressive African finance ministers were asked about the Wolfowitz flap. Here's how Antoinette Sayeh, Liberia's finance minister, responded:
"I would say that Wolfowitz's performance over the last several years and his leadership on African issues should certainly feature prominently in the discussions. . . . In the Liberian case and the case of many forgotten post-conflict fragile countries, he has been a visionary. He has been absolutely supportive, responsive, there for us. . . . We think that he has done a lot to bring Africa in general . . . into the limelight and has certainly championed our cause over the last two years of his leadership, and we look forward to it continuing."
In the same pages not long ago, William Easterly had this to say:
African governments are not the only ones that are bad, but they have ranked low for decades on most international comparisons of corruption, state failure, red tape, lawlessness and dictatorship. Nor is recognizing such bad government "racist" -- this would be an insult to the many Africans who risk their lives to protest their own bad governments. Instead, corrupt and mismanaged governments on the continent reflect the unhappy way in which colonizers artificially created most nations, often combining antagonistic ethnicities. Anyway, the results of statist economics by bad states was a near-zero rise in GDP per capita for Ghana, and the same for the average African nation, over the last 50 years.
Let's be clear -- Easterly is no fan of Paul Wolfowitz. But at least part of his criticism is based on the belief that reforms at the World Bank are not going far enough...
But beyond Uzbekistan and a few other laudable aid cutoffs, the Wolfowitz program was compromised by selective prosecution. By the bank's own measures, 54 other countries are about as corrupt as Uzbekistan, or worse. Should the bank cut off all 54? (I say, why not?) Wolfowitz was not willing to go that far, alas, which left everyone confused about what his criteria really were.
... and that the mission is not sufficiently single-minded:
Wolfowitz also continued a disastrous trend begun by [his predecessor, James D.] Wolfensohn, whose answer to every bank failure to meet a goal was to add three new goals. The pair have supplemented the bank's original objective -- promoting economic growth -- with everything from securing children's rights to promoting world peace. In so doing, they've sacrificed clarity of direction for ludicrously infeasible but PR-friendly slogans like "empowering the poor" and "attaining the Millennium Development Goals" (which cover every last ounce of human suffering).
Fair enough. But whatever the outcome of this most recent bureaucratic flare-up, it would be good to keep our eyes on the prize. Again from today's WSJ editorial:
... At the same April 14 press conference, Zambian Finance Minister N'Gandu Peter Magande endorsed the anticorruption agenda:
"We should keep positive that whatever happens to the president, if, for example, he was to leave, I think whoever comes, we insist that he continues where we have been left, in particular on this issue of anticorruption. That is a cancer that has seen quite a lot of our countries lose development and has seen the poverty continuing in our countries. And therefore . . . we want to live up to what [Wolfowitz] made us believe" that "it is important for ourselves to keep to those high standards."
Addendum: In my opinion, the development debate is represented by the ongoing conversation between Professor Easterly and Jeffrey Sachs. Courtesy of the former, you can follow that debate here.
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April 26, 2007
A Credit Crunch It's Not
It does appear that Wall Street is pretty happy with the way the world looks this week. U.S. macroeconomic data is only part of that picture, of course, but to the extent that it is I think Dean Baker makes good sense:
The Commerce Department's data did show better than expected durable good orders in March, but this was following very weak reports in January and February. Year over year, durable good orders are still down by more than 3 percent in nominal terms... Against a backdrop of serious weakness, a better than expected month is always good news, but it seems a bit excessive to make too much of this very erratic data.
The other cause for celebration was a 22,000 increase in the rate of new home sales in March, measured against a downwardly revised February level. The basis for the celebration here escapes me. The consensus forecast was for a considerably larger bounceback from the weak February level. Even with the uptick, March sales were the slowest since the recession, excluding February. And the small uptick was almost certainly driven by weather...
After years of piling debt on their homes, Americans are becoming more cautious about using them as a piggy bank.
A cooling housing market and higher interest rates have made homeowners more reluctant to tap the equity they may have built up in their residences...
Now, the slowdown in home-equity borrowing is leading to weaker sales in some markets for autos, building materials and electronics, says Mark Zandi, chief economist of Economy.com.
Barry Ritholtz sounds off on that last theme, and Calculated Risk is beginning to worry about a consumer-led recession. So why would I feel encouraged? The WSJ article continues:
Lenders are responding to slowing demand for home-equity borrowing by boosting their marketing, unveiling special offers and focusing on traditional uses of home equity, such as home improvement and debt consolidation. Wells Fargo this week rolled out a "Home Improvement Program" that gives home-equity customers discounts at retailers such as Best Buy, Brookstone and LampsPlus.com and access to a network of third-party local contractors.
J.P. Morgan Chase & Co. is running its first cable-television advertising campaign for home-equity borrowing, focusing on the product's flexibility. It's also rolling out a training program designed to help bankers in Chase branches do a better job of selling home-equity products. Bank of America, has launched a "green" home-equity card program, in which the bank will make a $100 donation to environmental group Conservation International on behalf of new home-equity customers who use their equity-line Visa card for purchases of $2,500 or more.
In my view, the biggest threat from housing-sector woes has all along been the possibility of spillovers into credit markets -- the kind that can restrain economic activity even after consumers and businesses shake off some of the caution that the stress of uncertainty inevitably brings. Several posts back I offered the opinion that a lack of available credit does not seem to be the driving factor behind weak growth in business investment. Today's story suggests that the same may be true of consumers. And that may just be the difference between a soft patch and downright ugliness.
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April 25, 2007
Some Inconvenient Truths
The Financial Times has uncovered some stumbling blocks on the road to carbon neutrality. Its multi-part report starts with a useful tutorial:
Offsetting is a fundamental principle of the Kyoto protocol – an agreement among more than 160 countries that came into force in 2005. It allows developed nations to meet emissions reduction targets by funding projects such as wind farms or solar panels in poorer countries through the so-called “clean development mechanism”. This awards such projects “carbon credits”. The credits, which can be traded on the international carbon markets, sell for between $5 and $15 (€3.66-€11, £2.50-£7.50) per tonne of carbon dioxide. To aid comparison, other greenhouse gases – such as nitrous oxide and methane – are measured as equivalents of CO2.
Carbon markets have grown rapidly since they were brought into being by the Kyoto treaty and the start of the European Union’s emissions trading scheme in 2005, under which companies were issued with tradeable permits to emit carbon. The price of carbon in the EU scheme more than halved last year after it was revealed that more permits had been issued than were needed in the first phase, from 2005 to 2007.
In the first nine months of 2006, according to the United Nations and World Bank, up to $22bn of carbon was traded. About $18bn of this was through the EU’s emissions trading scheme, and $3bn through the Kyoto mechanism.
The third element, the voluntary market, is where most offsets are bought. Businesses participating in this are not bound to reduce emissions, unlike companies under the EU trading scheme or governments under Kyoto. In 2005, the World Bank estimates, the voluntary market formed under 1 per cent of global dealings, trading fewer than 10m tonnes of carbon a year. But by 2010, the consultancy ICF International forecasts it will grow 40-fold to be worth $4bn.
Most companies going carbon-neutral use intermediaries to buy offsets on their behalf.
According to the FT, however, all has not gone well:
The FT investigation found:
■ Widespread instances of people and organisations buying worthless credits that do not yield any reductions in carbon emissions.
■ Industrial companies profiting from doing very little – or from gaining carbon credits on the basis of efficiency gains from which they have already benefited substantially.
■ Brokers providing services of questionable or no value.
■ A shortage of verification, making it difficult for buyers to assess the true value of carbon credits.
■ Companies and individuals being charged over the odds for the private purchase of European Union carbon permits that have plummeted in value because they do not result in emissions cuts.
The Kyoto protocol to fight climate change expires in 2012. The shape of a successor treaty is still in doubt, but one aspect seems certain: carbon trading will play a major role. A Financial Times investigation today reveals that carbon markets leave much room for unverifiable manipulation. Taxes are better, partly because they are less vulnerable to such improprieties.
I'm waiting to hear a good case made to the contrary.
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April 24, 2007
Less Bad Than Meets The Eye?
That seems to be the question after today's big negative surprise on March existing home sales. A sampling of reactions, from The Wall Street Journal:
This looks awful but it is surely just the reversal of the favorable weather effects which boosted Jan & Feb sales. After two months above the level implied by the pending sales index, March activity has undershot… Ian Shepherdson, High Frequency Economics...
Weak data correcting last month's quirky lurch higher… Lead indicators such as mortgage applications and the NAHB survey suggest resales may now flatten out in the short term at least. --Richard Iley, BNP Paribas
Then there are those on the other hand:
Ugly is the simplest word for this report. The housing market is still in the tank and while every time we get a huge decline in sales we move closer to the bottom, it is hardly obvious when we will actually see that bottom. --Naroff Economic Advisors ...
The broad-based nature of the sales weakness suggests that this is more than just a weather story… A better gauge of underlying home price trends -- the S&P/Case-Shiller index -- shows a steady deterioration in home values in recent months and is now down 1% from last year. --Morgan Stanley Research
Actually, the latest S&P/Case-Shiller indexes -- futures based on the S&P/Case-Shiller composite index for the ten largest markets more specifically -- suggest that, relative to last month, the bottom on expected prices inched north just a little bit :
On that other hand (again), prices are expected to keep falling throughout the year. No rest for the weary.
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Does Globalization Make Monetary Policy Harder?
According to the Financial Times, the answer is "maybe", but the message is a bit tricky. On the one hand:
... Take the renewed worries about how energy costs might contribute to broader price pressures...
Such cost contagion is, of course, not enough to cause inflation expectations to rise. Rather, it broadly shows markets doing their job in reacting to changes in relative prices. Higher oil prices encourage the use of substitutes. They also shift demand to goods and services less affected by the shock. As long as monetary policy remains steady, the end-result would still be painful but not inflationary.
That is right on target, but:
... According to conventional wisdom, globalisation has been one of the chief reasons why the loose monetary policy of the past decade has not translated into swifter consumer price inflation. Cheap imports from India and China were said to have eroded the pricing power of, say, US companies at home.
That view always raised a few questions, such as how long any such damping effect might last. Intriguingly enough, rising oil prices may already have caused it to wane.
Since the "cheap import" phenomenon is just another variant of "changes in relative prices", the article's first observation is perfectly apt: "As long as monetary policy remains steady, the end-result would still be painful but not inflationary." But the author of the article apparently has something a little more complicated in mind:
Recent research by two economists, Paul Bergin and Reuven Glick, suggests prices of a wide range of goods did indeed converge globally – until about 1997. Since then, prices have drifted apart again, perhaps owing to rising transport costs.
Here, more specifically, is what Bergin and Glick uncover:
This paper documents significant time-variation in the degree of global price convergence over the last two decades. In particular, there appears to be a general U-shaped pattern with price dispersion first falling and then rising in recent years, a pattern which is remarkably robust across country groupings and commodity groups... However, regression analysis indicates that this time-varying pattern coincides well with oil price fluctuations, which are clearly time-varying and have risen substantially since the late 1990s. As a result, this paper offers new evidence on the role of transportation costs in driving international price dispersion.
The implication seems to be that globalization -- increasingly open trade, more precisely -- has introduced patterns in observed prices that make it more difficult to disentangle relative price changes from trend inflation. There does not yet appear to be much evidence of such a problem appearing in the behavior of long-term inflation expectations:
Nonetheless, it is worth thinking about the FT's suggestion that the types of influences identified by Bergin and Glick "could make monetary policy a lot trickier going forward."
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April 15, 2007
Heard This One Before?
The world’s biggest economies on Saturday strengthened their commitment to reducing global imbalances but stopped short of making these pledges binding.
The “multilateral consultations” undertaken by the International Monetary Fund, included plans by China to make its exchange rate more flexible “in a gradual and controlled manner” against a basket of currencies.
There is just no way to get around the fact that China bought a ton of foreign exchange in the first quarter.
U.S. Treasury Secretary Henry Paulson stepped up his push for rule changes that would allow the International Monetary Fund to monitor and disclose cases of countries that manipulate their currencies, calling for action "very soon.''
"Reform of the IMF's foreign-exchange surveillance is the linchpin'' of needed changes in the 63-year-old fund, Paulson said today in a statement to the IMF's semiannual gathering in Washington. "We look forward to action in this important area very soon after these meetings.''
... but the response of the Chinese government sounds pretty familiar:
"We have noted the efforts to strengthen Fund surveillance since the Singapore Meetings, including through possible revision of the 1977 Decision on Surveillance over Exchange Rate Policies," [Hu Xiaolian, deputy governor of the People's Bank of China] said.
"In this regard, we wish to emphasize that, first, revision of the Decision should not proceed too hastily," she said. "In making adequate and careful analysis, the Fund must take the opinions of all concerned parties into account and build broad consensus among all member countries to ensure that it would benefit them all."
Second, in strengthening surveillance, the Fund should be realistic, and not overestimate, the role of exchange rate, Hu said.
"Biased advice would damage the Fund's role in safeguarding global economic and financial stability," she said, while emphasizing that the focus of surveillance should be consistent with the purposes laid out in the Fund's Articles of Agreement.
"Due respect should be paid to the fundamental role of sustaining growth in promoting external stability. External stability can only contribute to overall sustained stability when anchored by domestic stability," she concluded.
Also Saturday, Hu Xiaolian said that China's economic growth model has undergone welcome changes and its economy will continue on path of steady and fast growth.
"The Chinese economy is projected to remain on a fast growth track -- exceeding 8 percent in real terms -- in 2007," she said, adding that the government will give more emphasis to the quality and sustainability of economic growth.
She also said the reform of the China's foreign exchange regulatory framework has steadily deepened. "The RMB exchange rate formation mechanism is being improved and flexibility of the RMB exchange rate has increased significantly," she said.
Sounds like the status quo to me.
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April 12, 2007
Capital Spending Concerns On The Chart With A Bullet
Barry Ritholtz said it yesterday...
It is increasingly apparent from the many economic signals we have seen that business spending is fading, and is unlikely to replace consumer spending anytime soon. This is one of the reasons are recession expectations keep ticking higher, beyond 50%.
... and in an article dated tomorrow but posted online today, the Wall Street Journal reports that its own survey of economists reveals a similar concern, if not quite the same degree of pessimism:
Weakness in business capital spending is edging out housing as the dark cloud on the U.S. economic horizon.
A new WSJ.com survey found that 20 of 54 economic forecasters responding to a query cited soft capital spending as the chief risk to their forecast that the U.S. economy will grow slowly but avoid recession this year.
It is pretty clear from whence the worry comes:
The Commerce Department says overall business investment fell an inflation-adjusted 3.1% in the fourth quarter, the first drop since early 2003. And government measures of orders for and shipments of capital goods so far this year have been unexpectedly weak...
The Fed, in minutes of its March meeting released this week, said that "financing conditions and other fundamentals remained favorable for a pickup in capital spending."
But the current softness comes as a surprise to many analysts. Indeed, the Fed minutes noted, "Investment in goods and services other than transportation and high-tech equipment softened more than fundamentals had suggested."
The consensus, however, remains on the side of continued expansion:
Economists responding to the WSJ.com survey were slightly gloomier about the prospects for the U.S. economy than they were a month ago. On average, they now estimate the economy grew at a 2% annual rate in the first quarter, down from the 2.3% estimate they made in March. They predict the economy will grow at a 2.2% pace in the current quarter and pick up momentum in the second half...
On the whole, economists see limited risk of recession over the next 12 months, putting the probability at 26%, near the same level of risk they've forecast since last summer. When asked to identify the one economic indicator they would watch to determine if the economy will slip into recession, 23 of 58 named the Labor Department's monthly employment report...
Although I think Barry was correct in his warnings to not get carried away with the March employment report, the jobs picture is still the best reason to stay calm.
UPDATE: Not surprisingly, The Big Picture notices this story too. Mr Ritholtz, however, seems to think tight monetary policy is the root cause:
When your growth is dependent upon cheap money and easy credit, guess what happens when credit tightens and money becomes less easy?
I don't know about that take -- "money" doesn't seem to me to be the problem. I'd worry about something more fundamental being afoot.
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April 11, 2007
The Nattering Naybob Takes On Verizon Vs. Vonage
The Nattering Naybob has been thinking about this story ...
Vonage Holdings Corp. must pay $58 million plus monthly royalties to Verizon Communications Inc. for infringing three patents on Internet-telephone service, a federal jury ruled...
The jury found that three of five disputed patents were infringed and all five are valid.
... and he is not happy. Naybob's post contains a long and detailed discussion of what the disputed patents are about. Most of it is beyond me, but I do get the drift:
To allow a patent like this to stand would be analogous to allowing Verizon to patent the common practice of placement and use of salt and pepper shakers on public restaurant and cafeteria tables.
If these patents and their claims are found valid, Vonage would find it difficult to design an alternative way of hooking its network to the [PSTN].
And so would any VoIP provider as the entire VoIP industry has built its back on the ENUM standard in RFC 3761. Therefore, the entire VoIP industry would have to shut down, and the ENUM internet standard as defined would also be dead.
OK, I don't exactly understand that last part. Nor do I feel competent to judge Naybob's claim that the patent system is in this specific case being used to restrain competition rather than protect legitimate intellectual property rights. But it does bring to mind Adam Jaffe and Josh Lerner's "Innovation and Its Discontents." Say Jaffe and Lerner:
Over the course of the nineteenth and twentieth centuries, the United States evolved from a colonial backwater to become the pre-eminent economic and technological power of the world. The foundation of this evolution was the systematic exploitation and application of technology to economic problems: initially agriculture, transportation, communication and the manufacture of goods, and then later health care, information technology, and virtually every aspect of modern life.
From the beginning of the republic, the patent system has played a key role in this evolution. It provided economic rewards as an incentive to invention, creating a somewhat protected economic environment in which innovators can nurture and develop their creations into commercially viable products. Based in the Constitution itself, and codified in roughly its modern form in 1836, the patent system was an essential aspect of the legal framework in which inventions from Edison’s light bulb and the Wright brothers’ airplane to the cell phone and Prozac were developed.
All good, right? Nope.
In the last two decades, however, the role of patents in the U.S. innovation system has changed from fuel for the engine to sand in the gears. Two apparently mundane changes in patent law and policy have subtly but inexorably transformed the patent system from a shield that innovators could use to protect themselves, to a grenade that firms lob indiscriminately at their competitors, thereby increasing the cost and risk of innovation rather than decreasing it...
The origin of these pathologies goes back to 1982, when the process for judicial appeal of patent cases in the federal courts was changed, so that such appeals are now all heard by a single, specialized appeals court, rather than the twelve regional courts of appeal, as had previously been the case. And in the early 1990s, Congress changed the structure of fees and financing of the U.S. Patent and Trademark Office (PTO) itself, trying to turn it into a kind of service agency whose costs of operation are covered by fees paid by its clients (the patent applicants).
It is now apparent that these seemingly mundane procedural changes, taken together, have resulted in the most profound changes in U.S. patent policy and practice since 1836. The new court of appeals has interpreted patent law to make it easer to get patents, easier to enforce patents against others, easier to get large financial awards from such enforcement, and harder for those accused of infringing patents to challenge the patents’ validity. At roughly the same time, the new orientation of the patent office has combined with the court’s legal interpretations to make it much easier to get patents. However complex the origins and motivations of these two Congressional actions, it is clear that no one sat down and decided that what the U.S. economy needed was to transform patents into much more potent legal weapons, while simultaneously making them much easier to get.
An unforeseen outcome has been an alarming growth in legal wrangling over patents. More worrisome still, the risk of being sued, and demands by patent holders for royalty payments to avoid being sued, are seen increasingly as major costs of bringing new products and processes to market. Thus the patent system -- intended to foster and protect innovation -- is generating waste and uncertainty that hinder and threaten the innovative process.
Jaffe and Lerner summarized their reform proposals in a Wall Street Journal op-ed piece last year:
Our proposed reforms start with the recognition that much of the information needed to decide if a given application should be approved is in the hands of competitors of the applicant, rather than the [U.S.Patent and Trade Office]. A review process with multiple levels efficiently balances the need to bring in outside information with the reality that most patents are unimportant. Multilevel review -- with barriers to invoking review increasing at higher levels, along with the review's thoroughness -- would naturally focus attention on the most potentially important applications...
And to the litigation issue discussed in the Naybob post:
... there are always going to be mistakes, and so it is important that the court system operate efficiently to rectify those mistakes, while protecting holders of valid patents. Today, the legal playing field is significantly tilted in favor of patentees.
The reliance on jury trials is a critical problem. The evidence in a patent case can be highly technical, and the average juror has little competence to evaluate it. Having decisions made by people who can't really understand the evidence increases the uncertainty surrounding the outcome. The combination of this uncertainty with the legal presumption of validity -- the rule that patents must be presumed legitimate unless proven otherwise -- is a big reason why accused infringers often settle rather than fight even when they think they are right.
Both Jaffe and Lerner and Mr. Naybob make the argument that the stakes in getting all this sorted out are high. On that, I concur.
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- Unemployment Risk and Unions
- Cumulative U.S. Trade Deficits Resulting in Net Profits for the U.S. (and Net Losses for China)
- The Slump in Undocumented Immigration to the United States
- A Quick Pay Check: Wage Growth of Full-Time and Part-Time Workers
- Back to the '80s, Courtesy of the Wage Growth Tracker
- Introducing the Atlanta Fed's Taylor Rule Utility
- Payroll Employment Growth: Strong Enough?
- Forecasting Loan Losses for Stress Tests
- Men at Work: Are We Seeing a Turnaround in Male Labor Force Participation?
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